20100317 0910 Global Economic News.

The Federal Open Market Committee Tuesday left the fed funds rate unchanged at 0- 0.25% and kept the language “remaining exceptionally low for an extended period of time.” The Kansas City Fed's Thomas Hoenig dissented, arguing that the "exceptionally low levels" language was no longer warranted, as it could lead to the buildup of financial imbalances, increase risks to long-run macroeconomic and financial stability. The FOMC also noted that "economic activity has continued to strengthen" and that the labor market is "stabilising." (Xinhua) Kindly refer to today’s Economic Update for further details.

US new home construction and building permits fell in February, but both readings beat economists' expectations. Construction of new homes, or housing starts, fell to an annual rate of 575,000 during the month, down 5.9% from January's revised rate of 611,000 but up 11.3% from the February 2009 rate of 550,000.

• Economists surveyed expected February housing starts to dip to an annual rate of 570,000. The number of building permits issued during February fell to a seasonally adjusted annual rate of 612,000, which was 1.6% below the revised January rate of 622,000, but up 11.3% from the February 2009 rate of 550,000. Economists had expected building permits would fall to 601,000. (CNN Money)

US import prices decreased 0.3% in February (+1.3% in Jan), marking the first decline in seven months. Prices excluding petroleum climbed 0.2% last month and were up 2.1% from a year earlier. (Bloomberg)

The Obama administration officials urged lawmakers Tuesday to support the president's budget, saying it will drive job growth.

• In a joint written statement, the officials said that although the stimulus package has helped turn around the economy from when "the threat of a second Great Depression was frighteningly real," the 9.7% unemployment rate is "unacceptable by any metric."
• An economic forecast produced by the officials' three offices estimates that the labor market will add 100,000 jobs per month in 2010. However, they said the unemployment rate may still rise slightly over the next few months.
• The officials said that jobs will grow by 200,000 a month in 2011, bringing the unemployment rate down to 8.9%. In 2012, payrolls will improve by 250,000 jobs each month, pushing the jobless rate down to 7.9% by the fourth quarter.
• Real GDP growth will tick higher by 3.0% in 2010, and grow 4.3% annually in 2011 and 2012. They expect inflation to remain low, at 1.0% in 2010, 1.4% in 2011 and 1.7% in 2012. (CNN Money)

Europe’s core inflation rate fell to a record low in February as companies continued to cut jobs and consumers held back spending. Core consumer prices, which exclude volatile energy and food costs, rose 0.8% yoy (0.9% in Jan). That’s the lowest since data was first compiled in 1997. Headline inflation was 0.9% yoy in February (1.0% in Jan), matching consensus estimate. (Bloomberg)

Standard & Poor's Ratings Services said Tuesday that it has affirmed its 'BBB+' longterm and 'A-2' short-term sovereign credit ratings on the Hellenic Republic (Greece). At the same time, the ratings were removed from CreditWatch, where they had been placed with negative implications on 7 Dec 09 (the long-term rating) and 16 Dec 09 (the short-term rating). The outlook, which was stable prior to the CreditWatch placement, is now negative. (Xinhua)

The European Commission will tell Britain to do more to cut its ballooning budget deficit in the medium term, saying the country’s fiscal programme lacks ambition, a draft from the European Union (EU) executive showed. The programme failed to guarantee Britain would meet an EU deadline of 2014-15 for cutting the deficit to below bloc’s cap of 3.0% of economic output. The British government defended its budget plans in response to the leaked draft, saying they took into account a need to support the economy through the downturn. (Financial Daily)

South Korea’s president named Kim Choong Soo governor of the central bank as policy makers face political pressure to keep the benchmark interest rate at a record-low 2.0%. Kim, 63, currently envoy to the Paris-based Organization for Economic Cooperation and Development, will succeed Lee Seong Tae at the end of the month. (Bloomberg)

China’s inflation expectations are rising, making it more difficult for Premier Wen Jiabao to meet his 3.0% full-year price target and adding to the case for an interest-rate increase. The number of Chinese households expecting prices to rise in the next three months increased in a quarterly survey conducted last month, the central bank said. The data was seasonally adjusted. (Bloomberg)

Singapore’s small and medium-sized enterprises can soon access funds to help them grow their business overseas. From 1 Apr 10, local firms can apply for a S$10.0m SME Market Access Programme or SME MAP, administered by trade promotion agency IE Singapore. This is part of the government's recent budget announcement to help SMEs go global. (Channel News Asia)

The Philippines may further pare a lending program for banks or consider raising the interest rate for the facility as it unwinds more stimulus measures, central bank Assistant Governor Cyd Amador said. “We are looking at” reducing the so-called rediscounting budget for loans to banks. We might even look at the pricing of those loans as authorities aim to “normalise” the lending window,” she said. (Bloomberg)